Mutual Fund Growth & Expense Comparison – Version 10/98

All Data Entry cells show up in red.

There is an ongoing debate about whether you should buy a mutual fund with a front-end load (sales charge) or whether you should buy a No load fund. We built this calculator to illustrate for you the effect of rates of return, front-end sales charges and annual expense ratios on fund performance.

Most financial magazines that report on mutual fund historical performance will tell you if the fund has a front-end load and what the annual Expense ratio is for each fund. The expense ratio is a percentage of the fund that the Fund Company extracts to cover its expenses for operating the fund. Most companies assess and extract the expense ratio on a daily basis. For our purposes, this calculator extracts the annual expense ratio amount as a lump sum at year-end. This is slightly different than reality, but both funds will be treated the same, providing a level playing field for this comparison.

Data Entry:

Pretax Rate of Return: Enter here the rate of return you want to assume for both funds "x" and "y".

Front End Sales Load: Enter here the percentage of the front-end sales load each fund charges. From 0-8.5% is the allowable range.

Annual Expense Ratio: This information should be accessible from a financial publication that tracks mutual fund performance. Typically from .02% up to 2.5%.

Monthly Payments: This is to enter systematic contribution you anticipate paying to the fund.

Beginning Balance: Enter here want you want to assume you will start your analysis with a lump sum payment into the fund.

Test Period: This is on the right side of the calculator. This determines the test period for all calculations. All blue answers that are calculated for you are for the period you specify here.

Looking at the answers provided in blue lettering you can see the account balances through the year specified in the test period cell. You can also see the cumulative fees and expenses, and which fund would have yielded the best "net" return for you. The fund’s overall performance is influenced by the funds rate of return, front-end sales charge, and the annual expense ratio. All three of these factors are important, but the bottom line is what is your actual net result.